Hemlock for economic students
(Putting effective demand in the long run and prices of production together)

Tuesday, February 18, 2014

Gerald Friedman - Whose Recovery?

By Gerald Friedman

There is a story that when the late union leader Walter
Reuther was given a tour of a GM plant, a manager introduced him to a
set of the company’s new robots. The manager challenged Reuther to say
how he would organize the robots into the UAW. The union leader
supposedly responded by asking: how will General Motors sell cars to the
robots? While American unions have failed to organize the workers in
the new economy’s factories, its capitalists seem to have figured out a
good answer to Reuther’s question. We shouldn’t be surprised that conservative politicians and
orthodox economists are calling for the Federal Reserve to end its
program of monetary ease and for the Federal government to end its
program of extended unemployment insurance. Believing in Say’s Law and
the virtues of unregulated markets, they have never been comfortable
with state action to help the unemployed; instead, they have long argued
that the only proper role for government is to protect price stability
and the integrity of banking system. What should surprise us is that so few in the business
community are pushing back against these ideologues in support of
policies to bolster economic growth and employment. Robert Reich asks
whether capitalists and managers have forgotten the basic Fordist
compromise, in which businesses rely on affluent workers to consume
their products? If a rising tide lifts all boats, don’t capitalists
benefit when unemployment falls and workers have more to spend? And
shouldn’t they support policies that bring the tide in?

1 comment:

“Believing in Say’s Law and the virtues of unregulated markets, they have never been comfortable with state action to help the unemployed; instead, they have long argued that the only proper role for government is to protect price stability and the integrity of banking system.”

Delightful self-contradiction there of course: to have the state subsidise and protect the banking system is of course to advocate a form of interference in the free market. I.e. the political right opposes socialism unless it socialism for the rich.